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A major draw of the HECM (Home Equity Conversion Mortgage) for Purchase is that it
allows homebuyers age 62 or older to purchase a new principal residence using loan proceeds from the reverse mortgage. This home buying process, however, is a bit different from purchasing a home with a traditional mortgage.
A HECM for Purchase allows borrowers to obtain a reverse mortgage and buy a new home all within a single transaction. Not only does this enable borrowers to eliminate their monthly mortgage payments*, but it also allows them to reduce their closing costs and other fees since both the home-buying and loan processes are combined into a single transaction.
With a HECM for Purchase, a borrower provides a down payment that is typically about half of the purchase price of the new home.
To cover the remaining half of the purchase price, borrowers typically use the loan proceeds obtained from the reverse mortgage transaction. This could help buyers save their personal funds that might otherwise be used to purchase the property, and instead use this money for other means.
It is also important to note that similar to a conventional reverse mortgage, the older you are, the more loan proceeds you are eligible to receive from a HECM for Purchase.
If you are interested in learning more about how you can purchase a new primary home and obtain a reverse mortgage all at once, contact a Finance of America Reverse mortgage professional today!
*The home must be the primary residence and the homeowner must live in and continue to pay property charges including property taxes, fees, hazard insurance and maintain the home.